- The FDIC took over the lender — the 16th largest U.S. bank and a tech industry favorite — after a run on deposits and concerns about a broader crisis that led investors to dump other bank stocks.
NEW YORK: Silicon Valley Bank, one of the tech sector’s favorite lenders, is shutting down.
The California Department of Financial Protection and Innovation said Friday that it was taking over and closing the distressed bank to protect deposits, naming the Federal Deposit Insurance Corporation as its receiver. The FDIC has formed a separate entity where all insured SVB deposits will be available by Monday morning.
The closure marks the biggest bank failure since the 2008 financial crisis and the second-largest in U.S. history after Washington Mutual collapsed during that industry-wide meltdown, according to FDIC data.
As of the end of December, the Santa Clara, California-based bank — the 16th largest bank in the country — had $209 billion in assets with more than $175 billion in deposits. As with other FDIC-member banks, SVB deposits are insured up to $250,000 per depositor.
But the FDIC has yet to determine how many of those deposits exceed that insurance limit, and the agency said it would be “working over the weekend” to pin that down.
Uninsured depositors, for their part, will receive an advance dividend as well as “a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors,” the agency said.
Silicon Valley Bank referred requests for comments Friday to the FDIC’s takeover notice.
The shutdown came after a tumultuous morning for SVB, during which trading of its shares was halted after they fell by double-digits before markets opened. That downslide came on the heels of a more than 60% decline Thursday.
Worries over a run at SVB led Wall Street investors to dump other bank stocks as well. Shares of some prominent West Coast lenders took sharp nosedives Friday, including First Republic Bank, PacWest Bancorp and Western Alliance Bancorporation.
The bank even called the New York Police Department on Friday morning as customers began lining up outside its Park Avenue offices to get their money, but officers who arrived on the scene left after determining “there was nothing criminal” happening, an NYPD spokesperson said.
In view of the tumult, Treasury Secretary Janet Yellen told House lawmakers Friday morning, “There are recent developments that concern a few banks that I’m monitoring very carefully, and when banks experience financial loss it is and should be a matter of concern.”
First Republic submitted a filing to the Securities and Exchange Commission Friday morning that “reiterates [its] continued safety and stability and strong capital and liquidity positions.”
- News Agencies